Food Incubator Cooks Up Success
By Terry Poulton | December 31, 2009
Consumer interest in food innovations has never been higher than it is now, and food products are among Canada's top exports.
Yet the odds against successfully launching a new food-related business today are grim. While nearly three-quarters of small business startups in this sector survive their first year, less than one-third remain in business after five years, according to the most recent Statistics Canada study.
So how can a savvy entrepreneur sweeten those odds?
If you ask Susan Ho, she'll say the key is to take advantage of the state-of-the-art kitchen facilities, expert mentorship and industry networking offered at the Toronto Food Business Incubator, which claims to be the only non-profit operation of its kind in North America.
"Without what I've been able to learn and do at the incubator, we would never have been able to move the business along as fast as we have," says Ho, the founder and president of Tea Aura Inc.
How fast are we talking?
Ho says she was accepted into the first stage of TFBI's program in April 2008, based on her business plan for a novel product line of tea-flavoured shortbread cookies. Just four months later - thanks in part, she says, to wise advice on marketing and distribution - her gourmet cookies went on sale in Ontario, Quebec, the Maritimes and the eastern United States.
Tea Aura's rapid success exactly fulfills TFBI's announced mandate when it opened just over two years ago, with funding from Agriculture Canada and the City of Toronto's economic development arm, says incubator manager Albert Peres.
"We've had about 25 clients accepted into our program so far, and every one of them has gone on to launch their business or product," he explains.
If that sounds surprising, Peres says it shouldn't. "Studies prove that entrepreneurs who go through a business incubation program are far more successful than clients who do not. And there are four basic reasons why.
"One, we make sure that all our clients' business plans are well-formulated and fully fleshed out. Two, we offset a great deal of their start-up costs, with extremely cost-effective shared facilities and equipment they would otherwise have to pay for on their own. Three, our clients have access to industry experts through our mentorship program. And four, they become part of a synergistic network in terms of suppliers and outlets for selling their products. And, of course, our clients help one another, which would be unlikely outside an incubator."
What's the cost for all these kick-start benefits? Peres says monthly fees range from $300 to $1,200. To ease clients into eventual self-sufficiency, rates gradually rise during the incubator's three-stage program, from rock bottom to realistic market rates for comparable space and facilities. The idea, he says, is "that they can easily move their companies outside the incubator when they're ready because their expenses will be basically the same."
Ho says Tea Aura isn't quite ready to leave the incubator, where she is still manufacturing her cookies. But another TFBI client says his operation outgrew the 2,000-sq. ft. facility by the end of the initial three-month program.
Following a lengthy career as co-founder and sales manager of ShaSha Bread Co., and as a caterer and personal chef, Jonathan McDonough says he felt ready to develop his own line of salad dressings and condiments.
To give Chef Jono Ltd. the best possible start, he enrolled at the TFBI in August 2009, where he spent three intensive months testing recipes that sometimes took up to 50 bouts of tinkering to perfect. Meanwhile, he consulted with some of the incubator's network of mentors to work out packaging design, price points, demographic targeting, distribution and marketing strategy.
By the end of his stint at the TFBI, McDonough had built up sufficient key contacts to begin delivering large quantities of his products to some of Toronto's top gourmet shops, including Pusateri's, Longo's, Bruno's, The Healthy Butcher and Whole Foods.
"Other people could have spent half a million dollars getting all that in place, but I did it at the incubator by the seat of my pants," McDonough says with an obvious sense of fulfillment.
That emotion, says Peres, is a feeling that's common among TFBI's clients, whose products include "everything from baked goods to sauces, to flatbreads and frozen foods, with an emphasis on new food trends such as using local foods, organic ingredients and ethnic recipes, which is what consumers are most interested in today."
While clients continue whipping up delicious products in the incubator, Peres says the TFBI is concocting a strategy to spread its successful formula across Ontario in the future. "We're very interested in connecting with other regions to provide programming or services such as mentorship and networking, problem-solving, and opening doors to buyers and so forth in local communities.
"But it wouldn't make sense for entrepreneurs from those places to travel all the way to Toronto to use our kitchen facilities," he continues. "So what we're very interested in doing in the future is forging partnerships with colleges and possibly other incubators across the province."